Raman spectroscopy was used to investigate the structural transformations in nanophase titanium dioxide (TiO2) prepared by a colloidal chemistry method. The evolution of the anatase phase upon annealing was characterized by frequency downshift, intensity increase, and linewidth sharpening of the lowest-frequency Eg mode. The rutile phase was shown to be stabilized at temperatures below 350 °C and was postulated to reside in the surface region of the nanophase. The beginning and ending temperatures for the anatase-rutile transformation in the nanophase were found to be lower than those in single crystals or polycrystalline powders. The microscopic mechanism of the phase transformation was analyzed and the surface effect was suggested. An anomalous phenomenon of amorphization was also detected at the end of the anatase-rutile transformation in the nanophase TiO2.